Syria Post-Bashar: A State Without Sanctions
Syria is entering a new phase with the fall of the Bashar al-Assad regime, the rollback of most Western economic restrictions, and the lifting of sanctions imposed on the country. In a recent significant shift, the United States removed Syria from its list of State Sponsors of Terrorism, ending one of the oldest political and economic constraints that had accompanied Damascus since 1979. For decades, the authoritarian nature of the regime, corruption, and weak economic institutions have undermined the Syrian economy’s growth potential and lowered citizens’ living standards. Following the outbreak of protests in 2011 and their transformation into a wide-scale war, the economy suffered an unprecedented blow due to the destruction of infrastructure, disruption of production sectors, and the displacement of millions of Syrians both internally and externally.
**Oldest Sanctions**
One of the oldest strands of U.S. sanctions dates back to 1979, when the United States designated Syria as a State Sponsor of Terrorism. This classification remained in place for decades due to Washington’s accusations that the Syrian regime supported terrorist groups. However, the sanctions were not a single system initiated in 1979; rather, U.S. and European measures accumulated in stages, particularly after 2011, when Washington and its allies imposed broad sanctions on state institutions, economic sectors, and figures linked to the Assad regime. Among the most prominent of these measures was the Caesar Syria Civilian Protection Act, which entered into force in 2020 and imposed sanctions on individuals and companies dealing with the Syrian government in specific sectors, thereby increasing the risks associated with economic and investment activities in Syria.
These sanctions coincided with a broad economic collapse caused by the war. According to the World Bank, Syria’s GDP contracted by 1.5% in 2024, and the bank projected modest growth of only around 1% in 2025, amid continued liquidity constraints, security challenges, and the suspension of part of foreign aid.
**A Major Turning Point**
May 2025 marked a major turning point. Following a meeting between U.S. President Donald Trump and Saudi Crown Prince Prince Mohammed bin Salman in Riyadh, Trump announced his intention to lift U.S. sanctions on Syria, a move considered a significant shift in U.S. policy toward Damascus. Washington began implementing the path gradually; on May 23, 2025, the U.S. Department of State issued a 180-day exemption from certain mandatory sanctions under the Caesar Act, before Trump issued an executive order on June 30 terminating the comprehensive U.S. sanctions program on Syria, effective July 1.
The sanctions-lifting process reached a more decisive stage with the United States’ removal of the comprehensive sanctions program on Syria. The U.S. Department of the Treasury confirmed that the executive order issued in June 2025 lifted U.S. sanctions on Syria as of July 1, while maintaining specific sanctions against individuals and entities linked to Assad or involved in violations or illegal activities.
The Caesar Act, which was legislation passed by Congress rather than merely an executive order, required a separate legislative process for its repeal. Thus, a presidential decision alone was insufficient to remove the law; Congress had to repeal its provisions. Ultimately, the Caesar Act was removed from the U.S. legal framework, clearing the path for foreign companies, banks, and investors after years of risks associated with dealing with Syria. These developments also helped reopen channels for financing, investment, and reconstruction.
The decision on August 24, 2026, to remove Syria’s designation as a State Sponsor of Terrorism completed a path that had begun more than a year earlier. The U.S. Department of State stated that the decision removes legal restrictions associated with this designation, including those stipulated in sanctions regulations governing governments listed on the terrorism list.
**Assad and Captagon**
The trade in Captagon emerged in the final years of Bashar al-Assad’s rule as one of the most prominent sources of illegal financing linked to Syria, particularly as state resources dwindled and sanctions and economic isolation worsened. International reports indicate that networks linked to the former regime were involved in the production and smuggling of drugs, while the regime’s policies, the war, and sanctions contributed to weakening the Syrian economy and increasing the country’s isolation from its regional environment. The war’s repercussions also spilled over into neighboring countries through waves of displacement, declining trade and investment, and disruptions to transportation routes and economic exchanges.
Following the fall of Assad and the beginning of sanctions relief, Syria is entering a new economic phase with improved prospects for trade, investment, and reconstruction, as well as a return to openness with Arab countries and the international community. Although the economy still faces massive damage from years of war, alongside weak infrastructure and the need for institutional reform, the easing of sanctions has removed a significant portion of the constraints that hindered financial and investment transactions, opening the door to gradual recovery and the reintegration of the Syrian economy into its regional and international environment.
